Allied Brands (ABQ)

The share price of the food and retail franchising group has lost momentum in recent weeks. Allied Brands’s price has tumbled by about 19 per cent since the start of the year.

The fact that it is relatively illiquid and low-key probably doesn’t help. And some might consider Allied Brands a lower quality investment compared with some of its rivals like Retail Food Group as Allied is not generating free cash flow.

Allied recently acquired the Coffee Bean & Tea Leaf retail chain and secured a two-year $4.9 million credit funding facility from a New York institutional investor to help fuel growth. The group also managed to pull off at least one opportunistic takeover during the height of the credit crisis by allegedly snapping up the Villa & Hut Kafe and furniture chain by paying off its bank debt.

The stock is trading at only five times its earnings for the past 12 months – a 64 per cent discount to other small-cap consumer services companies.